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 Any takeover offer needs to be at a fair price and provide a high
degree of certainty that it will clear regulatory hurdles, Syngenta
Chairman Michel Demare said on Tuesday, reaffirming the Swiss firm's
opposition to Monsanto's current proposal.
Monsanto was trying to buy Syngenta "on the cheap" and the board had
unanimously rejected the initial approach, Demare said, taking the
unusual step of commenting in a video on the company's YouTube
channel.
Demare said the Swiss group can boost profit margins on its own and
that the U.S. seeds giant was underestimating regulators' concerns
about a tie-up.
The company would consider sweetened bids but only if they offered
more certainty and higher compensation if the deal fails, Demare
added.
"Syngenta will be seeking feedback from our largest shareholders in
the days ahead," a spokesman said in a written statement.
Swiss media reports have said there is growing discontent among
shareholders about not being consulted sufficiently by Syngenta's
management in the takeover tussle.
Basel-based Syngenta, the world's largest maker of crop chemicals,
rebuffed an initial approach by Monsanto in May, partly on the
grounds it did not address regulatory concerns.
It also rejected the $2 billion Monsanto offered to pay if the
merger failed to get approval from regulators after 18 months.
Many analysts have questioned Syngenta's claim that antitrust
remedies proposed by Monsanto were insufficient.
Monsanto Co, the world's largest seed company, said last month it
plans to divest Syngenta seeds and genetic traits businesses as well
as some overlapping chemistry assets to win regulatory approval for
a takeover.
SHARES TRADE AT DISCOUNT
Major investors in the Swiss group last month expressed confidence
that a deal would come off if the U.S. suitor raises its initial 449
Swiss francs ($483.4) per share bid by at least 10 percent.
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The shares were up 1.2 percent at 405.10 francs at 7.15 a.m. EDT,
with a 9 percent discount to the suitor's offer reflecting doubt
that the deal will come to fruition at the suggested terms.
"Syngenta seems to be asking for both a 'significantly' higher offer
and a higher break-up fee. This outcome is not impossible," said
Bernstein Research analyst Jeremy Redenius.
Demare said Monsanto was trying to take advantage of a Syngenta
share price temporarily dragged lower by weak emerging market
currencies and the decline in prices of agricultural commodities to
multi-year lows.
He reaffirmed the group's target of a 2018 margin of earnings before
interest, taxes, depreciation and amortization of 24-26 percent over
sales, with cost cutting measures starting to deliver savings "at an
accelerated pace".
Analysts, however, expect a 21.7 percent margin (EBITDA) over sales
on average in 2018, based on five estimates collected by Thomson
Reuters, up from 19.3 percent in 2014.
U.S. firm Monsanto posts third-quarter earnings on Wednesday, where
it is expected to talk up a possible combination with Syngenta.
(Addiitonal reporting by Joshua Franklin in Zurich; Editing by
Muralikumar Anantharaman and Keith Weir)
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